No matter the size of the business, terminating a worker’s employment takes preparation and care. Employees have protected rights in the United States designed to keep them from suffering under unfair employment. Most companies actively seek to avoid hurting their employees, although termination is necessary in some cases.
Creating an official discipline and employee termination policy as part of a broader employment policy helps employers adhere to state and federal employment law. A master of science in human resources management is helpful for individuals looking to advance in their careers and implement human resource best practices. This guide identifies a number of steps human resources (HR) managers should follow to decrease the likelihood of conflict between the employer and former employees.
1. Documenting Termination Processes
The first step toward the creation of an effective employee termination program lies in the documentation of employment policies and processes. Employees can be held to many different standards depending on their level of employment and various responsibilities. However, those standards must be clearly delineated so that employees know what to expect from supervisors, managers, and HR staff.
Employers must have a specific path for notifying employees of documented infractions, with instructions to escalate as necessary. This escalation may include:
- poor performance reviews
- verbal warnings
- written warnings
- employee suspension (with or without pay)
HR managers generally aim to minimize the likelihood of conflict between employees and department supervisors or managers. With specific processes in place for employees and administrators, all parties can keep work-related concerns professional and efficient.
2. Recording Incidents
Using documented employment policies, managers keep employees informed on their status within the company. Properly recording incidents is vital to the overall termination process. With an established pattern, supervisors and managers should notify employees of recorded infractions based on tardiness, excessive absences, work behavior and treatment of other employees, as well as violations specific to the business’s typical function. All instances of violation should be recorded to establish just cause for employment termination, should it become necessary. HR representatives may also maintain a log of these offenses for each employee for quick reference.
3. Attempting to Reconcile After Suspension or Termination
While employers may choose to engage employee suspension or termination for just cause, it is a useful practice to first attempt to reconcile with the employee. The process to hire an employee, provide necessary training, and manage employee concerns and benefits costs money beyond the employee’s actual wage. Hourly wages only comprise about 70 percent of a business’s expenses to maintain an employee.
Minimizing waste in this area often calls for solutions to common employee problems. Employers should demonstrate that they have taken steps to encourage employee compliance through additional training, attempts to mediate complaints, and clear, written statements of intent to terminate if circumstances do not change. Supervisors and managers can directly communicate with employees about underlying causes for recurring violations of established employment policies. HR managers may choose to act as mediators to resolve conflicts between staff members and management. If this approach is ineffective, administrators might elect to escalate to suspension or employee termination.
4. Analyzing Relevant State Laws
Before beginning the process of firing an employee, designated HR representatives must consult local laws for any restrictions. All states, except Montana, function as “at-will employment” states. This means that state employment law dictates that businesses may, for the most part, choose to hire or terminate employees as they see fit. There are exceptions to this general rule, tied to the reasons for which employees are hired or terminated, and also related to individual state laws. Employers are bound by federal and state laws as they pertain to any given sector of employment.
There are three possible exceptions to the definition of at-will employment that states have elected to use. The first and most common is the public policy exception. This exception means that employers cannot legally terminate employees for taking advantage of services to which they have legal access (e.g. Workers Compensation, Family and Medical Leave Act) or for refusing to break the law. Forty-three states, including Pennsylvania, accept this exception. If an employer terminates a worker for use of public programs or by obeying public policies, the employee has a possible case to sue for wrongful employee termination.
The second exception involves implied contract exceptions. Under the implied contract exception, anytime an employer gives the impression that certain procedures will be followed for suspension or termination, these terms should be followed. For example, a business that identifies a number of procedures for discipline and eventual employee termination must adhere to those policies to avoid coming under legal scrutiny. Thirty-eight states accept some form of this exception, underscoring the importance for HR managers to ensure that employee handbooks and other printed materials identifying employment policies are appropriately specific and current.
The last exception, called the “covenant of good faith and fair dealing” exception is the least common, with only 11 states making the exception. The covenant of good faith exception may be invoked when an employee is terminated without just cause, generally despite years of effective service. In these states, a covenant of good faith and fair dealing is established in all employment policies, calling for employers to demonstrate a history of equitable interactions with employees.
5. Avoiding Discrimination/Wrongful Termination
Other specific exceptions to at-will employment fall under the category of discrimination, as interpreted under federal employment law. During the employee termination process, HR should serve as oversight to identify any possible examples of discrimination that employees may have experienced by management or administration. The Equal Employment Opportunity Commission (EEOC) is an independent federal agency that provides access to education, legal and other resources for workers and employers, with an ultimate goal of discrimination-free employment. Per the EEOC, employers may not engage in discrimination in their employment policies based on:
- ethnic/national origin
While most employers aim to provide positive employment environments for all workers, incidents of employee discrimination are not always overt or systemic. Discrimination can occur at all levels of the company. HR managers should take a proactive approach to isolating and rooting out all instances of discrimination to avoid wrongful termination lawsuits. The Civil Rights Center, as a part of the U.S. Department of Labor, provides training and educational materials to employers to assist them in compliance with federal discrimination laws. These guides include rules and advice for creating employment policies to manage workers with disabilities, limited English proficiency, pregnancy concerns, and other protected classes.
Veterans of the U.S. military constitute another protected class of employees who, according to federal employment law, may not legally be subjected to discrimination based on their military service. Those with past service records, who have current military obligations or who intend to serve at a later date, may not be overlooked for employment or lose their jobs based on their military status. In all of these protected classes, employers should take extra care to document all proceedings to provide an effective case against wrongful termination, in the event that an employee decides to sue.
6. Officially Terminating Employment
When all criteria for a proper employee termination have been met, the next step for HR representatives is to notify the employee. Although employers may choose to terminate employees at any time, many find that letting someone know they have been let go is best done right before a weekend or other days off. Employees may be less likely to retaliate in anger if they can take a few days off to calm down and reflect. HR should establish specific protocol for removing an employee from the premises after termination. Depending on the severity of the employee’s conduct or infractions, it may be wise to employ the services of security workers to help the employee gather all belongings and leave the premises.
During an exit interview, employees often ask about the status of their final paychecks or the availability of any severance packages related to their employment termination. The Fair Labor Standards Act does not require that employees receive their final paycheck upon termination. Some states have this as part of their own employment law. Likewise, severance pay is not required. However, severance packages are often offered to employees with a long, positive history of employment with the company, particularly when the termination is related to system-wide layoffs.
Certain workers have additional protections available to them when employers wish to offer severance. It is common for businesses to require employees to sign a release form agreeing not to bring a wrongful termination lawsuit against the company in exchange for specified benefits given in a severance package. According to the Older Workers’ Benefits Protection Act, employees over the age of 40 must:
- be given additional time to analyze the release form
- have the ability to revoke the agreement for a specific period of time after signing
- be told to consult with an attorney before signing
This act serves as an additional protection against the discrimination of workers of older ages.
7. Completing Additional Termination Paperwork
Even after employees are terminated, they may continue to receive benefits from their former employers under current employment law. HR managers usually supervise the completion of paperwork related to these benefits. The most common examples include the continuation of health care benefits, unemployment benefits, and retirement plans. Since most people receive health insurance through their employer, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers, with more than 20 employees, to offer additional health insurance coverage to former employees for a short time. Employers must provide notification of this available coverage and also discuss options for continuing or rolling-over fully-vested retirement plan investments or pensions.
Employees may also become eligible for unemployment benefits, if they are deemed to have lost employment through no fault of their own, according to state employment law. This involves a system of regular payments of small amounts designed to support an individual while he or she looks for work. An employee’s ability to receive unemployment benefits is not necessarily a statement that the employer terminated employment wrongfully. Government employees consult employers for specific information concerning the employee termination before making a decision, and often speak with HR departments for this data. A professional response to all record-keeping endeavors minimizes conflict and usually ensures a more satisfactory resolution to unemployment claims.
As employers look to sever an employee’s relationship with the company, they should always keep an eye on ethical and legal considerations they may face with employee termination. By understanding and following employment law at the state and national levels, and creating an employment policy that reflects these laws, HR representatives can help to build a better working environment for everyone.